Unless if she can replace the car for what, $6k? then she is better off fixing. $6k if she sells as-is (that's a wild guess for a sale price on a good-condition Yaris with a bad trans). If she truly "loves" the car then it may be better to fix.
Not sure what could go wrong, just living with a loud transmission. Keep an eye on the fluid, and when it goes brown and/or glittery, then do something? Maybe she'll get lucky and it'll last long enough--either out of college, or until she can better afford to fix. Maybe pad it along a bit, by hitching rides and using public transportation, whenever possible. Change the fluid and hope for the best! [In this case I would drop the filter and replace, or at least check. Maybe you'll get lucky and it's just a bad seal on the filter?]
It'd be nice to do a teardown, but you have to pay for that, and the car is down until it's back together. So I'm not sure that is a good option. Not if it's required on a regular and often basis.